"What Are Business Owners to Do?"
Economy Still Sending Confusing Mixed Signals

Daily News Journal (8/25/02)

By Jennifer Farish / Staff Reporter of The Daily News Journal

Last week Federal Reserve Chairman Alan Greenspan said the economy is "weak," but analysts say it is recovering. So what are business owners supposed to make of all the uncertainty over the economy?

"We are still at a point of mixed signals," said David Penn, director of the MTSU Business and Economic Research Center. "My impression is that the economy is slowly coming around."

Penn added the day-to-day fluctuation of good news and bad news in the economy may be keeping the stock market from showing a sustained increase.

"Consumer confidence is not as strong as we would like it to be," Penn said, adding the recent corporate scandals and ever-changing stock market may be contributing to the loss of confidence.

Certain areas of the economy are doing well. Auto sales and manufacturing production numbers have both increased over the past few months, although it has not translated into more jobs in manufacturing, Penn said.

"We need the other cylinders of the economic engine to start firing for the economy to completely recover," Penn said.

Sheila Danzig, a marketing consultant, said it is important for small businesses not to let their business decline during this time of uncertainty.

In her report "How to Survive A Recession: Expert Advise to Grow Your Business in Tough Times" Danzig outlines three strategies businesses can use to keep existing customers and draw in new ones.

• Create more effective advertising.
  Danzig cautions businesses should not cancel ads, but instead learn to make the
  advertising more effective through powerful headlines.
• Improve customer service.
  Danzig said it costs five times as much for a business to get a new customer as it does to keep the customers it already has.
• Profit from free publicity.

Danzig's complete report can be viewed at www.FreePressCoverage.com.

There are also ways to bring costs down when the economy is slow, including slashing travel, consulting and entertainment budgets; speeding collections and slowing payments; renegotiating purchasing contracts; forming partnerships to share costs; and putting selected spending projects on hold, according to Rosabeth Moss Kanter, of Harvard's Business School.

As for starting a new business during the slow economy, USA Today columnist Steve Strauss said it may not be a bad idea, especially since interest rates are lower. Strauss said it's important for new business owners not to take wild risks; make sure they have enough money to market the business once it is started; and have a business plan that determines what will make the business different, how much money is needed and how competition will be handled.